It can be a vague term to employ. Pramod Gupta, vice president of supply chain consulting with GEP, offers a definition of supply chain resiliency, and explains its importance to organizations today.
Gupta defines “resiliency” as the ability of companies both to sense a supply chain risk and respond to it. “Most companies are in a very reactive mode,” he says. “They’re essentially responding to a disruption that has already taken place, and the response is rather weak.”
The past 18 months has underscored that weakness, to the point where most supply chains today are “broken,” Gupta says. “Companies are trying to figure out what to do about it in a hurry.” They’re in that predicament because they relied on “half-baked” business-continuity plans, and “never had the muscle to respond to the risk itself.”
The problem is exacerbated by years of cost-reduction efforts that have slashed inventory and created “lean and mean” supply chains. “They lack the key ingredient: being resilient,” says Gupta. “Essentially, they have become rigid. That’s why they fail to flex when needed.”
Gupta says it’s “absolutely critical” to possess the “radar” necessary to sense developing supply chain risks, such as port congestion or the impact of the COVID-19 pandemic. Only then can they take appropriate action to mitigate the effects. But it’s more than a matter of preparing for a specific disruption, such as a pandemic or tsunami. Companies must be able to respond to whatever issue confronts them, through early detection and appropriate actions. Steps that can be taken include the shifting of inventory (assuming that the company in question has enough of it on hand) to markets where it’s most needed, running manufacturing overtime or changing production lines, and altering the routing of cargoes in transit.
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